Ch.6 The Law Of Agency

commingling

**MUST AVOID** placing client or customer funds in the agents personal account

employer

Principle broker of firm

fiduciary

a person to who property or the power t act is entrusted on behalf of someone else. the agents role in the transaction is to consider the interests of the principle first and foremost.

inherent authority

activities the agent needs to perform that are not mentioned in the contract

ostensible agency |aka| implied agency

agency created by estoppel

estoppel

agency created by operation of law. someone may represent that another person is his or her agent, and a third person may rely on that representation and deal with the "agent" accordingly.

conflict of interest

agent must disclose to the principle any relationship the agent has to another party to the transaction, even if the agent or other party will derive no benefit from the relationship.

ready, willing, and able buyer

agents primary gaol in real estate listing agreement is to find a ready, willing, and able buyer

cooperating brokers

agents who try and sell a property that is currently listed for sale by a broker but who work for someone other than the listing broker. Also might be: -the agent of the listing broker -subagent of the seller (with the sellers authorization, typically through use of the MLS) -agent of the buyer

equal dignities rule

an agency permitting an agent to establish such a contract for the principle must itself be in writing. The three applicable rules from the statute of frauds are summarized below: 1.the CA real estate law required tat the employment agreement between a real estate broker and salesperson must be in writing. 2.the statute of frauds dictates that a contract for the sale of real estate or the lease of real estate for longer that one year must be in writing. this means that an agency agreement authorizing those actions must be written. 3.the statute of frauds also requires that a contract that authorizes an agent to find a purchaser or lessee (for more than one year) of real estate - a listing agreement - to be written.

secret profit

an agent can never make a secret profit

attorney-in-fact

an agent who has been granted a power of attorney by the principle.

multiple listing service (MLS)

an organization of real estate agents that receive information from individual members on their property listings and makes that information available to participating members. MLS members agree to abide by the rules of the MLS. Includes: -asking price -property description -indicated how and when property may be shown -tells cooperating broker what the commission to the selling agent will be

apparent authority

ana gent may appear to have authority he/she does not actually have. places no obligations on the party the agent claims to represent, but it will make the agent liable for his or her misrepresentations.

general agent

any agent that is not a special agent. has much wider scope of authority.

ratification

authorization

power of attorney

authorizes an agent to act in the capacity of the principle.

general power of attorney

authorizes an agent to carry out all of the business dealings of the principle.

cooperating split |aka| commission to the selling office

cooperating brokers share of the commission.

actual authority

defined in the agency agreement

Real Estate Transfer Disclosure Statement

details the mechanical and structural conditions of the property in a form specified by law.

bilateral contract

each party in the contract has separate obligations to perform as provided in the contract

express agreement

established by an act of the parties that both parties acknowledge. the agreement does not need to be in writing unless, -the law requires a writing, or -the agent is to perform an act on behalf of the principle that requires a writing

recovery account

established to help compensate victims of fraud, misrepresentation, or conversion of trust funds when they cannot collect a court-ordered judgement against a real estate licensee.

special power of attorney

gives an agent authority to carry out a specific act or acts.

option listing

gives the broker the right to purchase the property. thus the broker can be both a principle and agent in the same transaction. If the broker exercises this option, the principle must be informed of the brokers profit in the transaction and free to it in writing.

subagent

historically any agent who wrote an offer on behalf of a buyer was considered a subagent of the seller's broker, and, with the seller's consent, the listing broker agreed to share the commission with the subagent.

due diligence

implies a good-faith effort to fulfill contract obligations.

pocket listing

listing agent markets privately before entering it into the MLS. **Unless specifically authorized by the seller, this practice usually is a violation of the MLS rules as well as the employing brokers policy.

agency confirmation form

listing, sales transactions, and disclosure obligations apply to a lease of a dwelling when the lease term will exceed one year.

exclusive authorization and right-to-sell listing

most commonly used form of agreement, only one that will be accepted by most employing brokers. the broker is entitled to a commission no matter who sells the property. The commission is usually shared with a cooperating broker or subagent who procures a buyer.

special agent

one appointed to carry out a single act or transaction

loyalty

one of the most important duties owed the principle

unilateral contract

only one party has an obligation under the contract. *NOT common real estate contracts in CA

full disclosure of material facts

owes the 3rd party the duty of cycling anything the agent knows or should know regarding the property that is the subject matter of their dealings.

multiple listing clause

part of the exclusive listing and right-to-sell listing allows the property to be made available to other brokers participating in the MLS.

duty of care

principle may not interfere with the agents prospective economic advantage

prospective economic advantage

principle may not sabotage the agents business and make a deal behind their back that the agent was initially the case of.

exclusive agency listing

property owner can not list the property with another broker at the same time. broker has some protection of getting at least part of the commission if another broker finds a buyer. the property owner can still find their own buyer and avoid paying any commission however.

open listing |aka| non-exclusive listing

provides for a commission to the broker if the broker is the procuring cause of a sale. it provides no compensation is another broker fulfills that task of if the owner does. often used in industrial and commercial transactions but rarely in residential.

associate licensee

real etate licensee employed by the broker

principle

represented by agent when dealing with a third party

agent

represents principle in dealing with a third party. the broker "under whose license a listing is executed or an offer to purchase is obtained."

independent contractor

sales agent for "employing" principle broker. flexibility in performing the task undertaken to receive commission based on completed transactions, instead of salary, with no payroll deductions. Real estate agents generally act as independent contractors inter dealings with clients as well as in their dealings with each other.

employee

sales agent for employing principle broker. typically under very close control as to the place where work is performed, the hours spent on the work, and the manner in which the work is carried out. Receive wages from which payroll taxes are deducted and may receive other employee benefits. also subjects employer to certain liability for acts performed in the course of employment.

agency

the act of representing someone else

full disclosure

the agent makes an accounting to the principle of the details of the transaction. disclosing facts pertaining to the potential buyer/sale that might even give the seller an upper hand. ex. knowing the buyer has limited time in town to make the purchase

procuring cause

the agent must be the person who initiated the contract that brought the third party to the principle

net listing

the brokers compensation is whatever amount the property sells for over a previously agreed (net) amount. if the selling price is equal to or less than the agreed amount the broker receives no compensation. Before it is accepted by the seller, this kind of agreement requires full disclosure of : -the selling price, and -the amount of compensation the broker will receive

OLD CAR

the real estate agent owes the principle the duties of a fiduciary and OLD CAR: Obedience Loyalty Disclosure Confidentiality Accountability Reasonable care and skill

dual agency

the same "agent" represents two principles in the same transaction. a listing broker may find a buyer for the property. a dual agency can also occur when two associate licensees in the same brokerage work on behalf of the employing broker to represent both the buyer and the seller.

single agency

when an agent represents only one principle

safety clause

will cover a buyer the broker is working even after the listing expires, as long as the broker has registered that buyer with the owner.

agency disclosure form

written details of the agency relationship must be disclosed in any transaction involving property of one to four residential units. The written disclosure must be made by: -the listing agent to the seller before the seller signs the listing agreement -the selling agent (who may also be the listing agent) to the buyer before the buyer makes an offer to purchase -the selling agent (if different from the listing agent) to the seller before an offer to purchase is accepted. The selling agents relationship must be consumed in -the purchase contract -a separate writing executed or acknowledged by the seller, the buyer, and the selling agent before or at the same tim e the purchase contract is executed by the seller and buyer. The listing agents relationship must be confirmed in writing in -the purchase contract or -a separate writing executed or acknowledged by the seller and the listing agent before or a the same time the purchase contract is executed by the seller.